New technological trends impact online business

E-commerce transactions have penetrated multiple fields with the emergence of innovative technologies such as cloud computing, Big Data, social networks, Internet of Things (IoT), and blockchains.

The E-Business Index 2018 released by the Vietnam E-Commerce Association (VECOM) on March 14 showed that Vietnam’s e-business index hit 37.7, higher than last year’s figure of 31.2.

The growth rate of e-commerce transactions in 2017 compared to the previous year stood at 20-25%.

Online retail sees impressive growth

Online retail and marketing, tourism, and payments experienced the most impressive growth. For example, online retail revenues increased by 35%, while earnings from shipping services grew from 62% to 200%.

The National Payment Corporation of Vietnam (NAPAS) reported that in 2017 online transactions using domestic cards rose by nearly 50% in volume and 75% in value year-on-year. Several affiliated marketing companies posted a growth of 100-200%.

According to the 2016 hotel survey conducted by Grant Thornton, bookings through online travel agents (OTA) accounted for 20% of all income from reservations.

From the results of a 2017 survey by VECOM, the rate of reservations via online travel agents increased by more than 30%, pushing online tourism earnings up by more than 50%.

According to the statistics for Vietnam in 2017, there are 53 million Internet subscribers in Vietnam and the figure is forecast to hit 59 million by 2020. Experts say that cloud computing, Big Data, and mobile phones have made a huge impact on Vietnam’s e-commerce.

A further impact is expected from other dominant technologies such as artificial intelligence, Internet of Things (IoT), virtual reality (VR),andblockchains, which will affect e-commerce this year and in the following years.

The development of new technologies has accelerated the establishment of various types of online business and poses a number of challenges related to healthy competition and consumer protection.

Impact of new technological trends

Sharing the view on the impact of new technological trends in e-commerce at the Vietnam Online Business Forum (VOBF), Ms Dang Thuy Ha, director of Consumer Behaviour Research at Nielsen Vietnam, said 14 technological advancements such as Artificial Intelligence, Big Data, and virtual reality (VR) will become ever more widespread and have an impact on the business activities of enterprises.

Mr Ha noted that technological advancements have affected users and e-commerce activities in Vietnam, and trends such as the sharing economy, VR,Big Data, and cashless payment are projected to become pervasive in the near future. Revenues from the sharing economy are predicted to reach US$300 billion by 2025 and nearly 4 billion people worldwide are to subscribe to the Internet by 2020. About 30% of global retail sales will be conducted via software applications or computers.

Experts say cashless payment systems are a dominant trend that has developed rapidly over the past two years. In addition, the impacts from activities of transport service providers such as Uber and Grab have popularised the concept of a sharing economy in Vietnam. However, like other nations, Vietnam has encountered difficulties in managing the new economic model.

Experts have emphasized the need to research the benefits of the sharing economy model and build proper policies to encourage businesses and other firms to provide services under the model based on the principle of improving socio-economic efficiency.

Another trend to attract the attention of e-commerce businesses is the emergence of mega corporations. A representative from Amazon said that the global retail market has shown a trend of moving toward a dependence on e-commerce.

According to the statistics from research companies, e-commerce earned revenues of US$2 trillion in 2016 and will expand by more than 100% in the next four years. This is a significant change in the retail sector while the sector’s growth rate stands at 26%.

Trans-border sales have developed rapidly with a growth rate of 20-30% predicted for the next few years. Following this trend, Amazon is investing in helping sellers gain access to global buyers in the most efficient manner.

A representative from the Import-Export Department under the Ministry of Industry and Trade says the combination of e-commerce and import-export activities are a vital factor for businesses in the current context. The representative emphasizes the need to have global businesses like Amazon support export activities so that businesses will pay more attention to the application and benefits of e-commerce.

Experts say the potential for e-commerce in Vietnam is great but will require joint efforts for further development.

They note that in the current environment of Vietnam’s comprehensive integration, the recent signing of several free trade agreements (FTAs) such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), will have a huge impact on e-commerce activities. However, the legal foundation for e-commerce activities remains limited, posing

a number of challenges to many nations, including those at a higher level of development.